🏴☠️ ⚡️12x KPIs to Objectively Size Up Any SaaS Firm (Acquisition Concept)
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TABLE OF CONTENTS:
The 12x Base Rates, Descriptions, Benchmarks and Sources
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As Dalio says, “Truth - more precisely, an accurate understanding of reality - is the essential foundation for producing good outcomes.”
So how do we grasp reality as buyers and builders of SaaS?
The trouble is that most opinions, views, etc., are subjective (informed via the eye of the beholder), and humans come with an INSANE amount of cognitive bias and flaws in our wiring.
Truth is elusive to humankind.
It follows that the most important thing we can do is establish objective points of view underpinned by data. Furthermore, all points of view must be interpreted on a relative basis. One is only tall in a room full of short people.
So, what’s the most efficient and repeatable way to size up a SaaS firm relative to its peer group?
The table below is our attempt at ‘splitting the atom’ to establish the simplest, most universally applicable, set of KPIs for objectively assessing a SaaS firm. In practice, this exercise involves using the table for guidance to establish base rates (read: a monthly average based on ~12 months of operations), which you compare against benchmarks to understand relative performance and, more importantly, the potential for improvement.
A few disclaimers: these KPIs assume sales-led growth (SLG) with a ~$15k average contract value (ACV) for firms doing $1M to $5M in ARR, and the benchmarks are BASIC. It is 💯 worth the time to sharpen each respective benchmark based on your context.
I’ll leave it at that.
Godspeed in your pursuit of the almighty truth.
For the love of the game 🏴☠️ ⚡️
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